Sen. Bob Corker (R-Tenn.) ”” a member of the Senate Banking Committee ”” sent a letter to Treasury Secretary Tim Geithner Monday with a list of questions regarding what the Republican called a “blank check” to Fannie Mae and Freddie Mac.
In the letter, Corker criticized the Treasury’s removal of a cap on credit available to the two government-backed firms that were in at the nexus of the mortgage crisis.
“On Dec. 24, 2009, the United States Department of the Treasury announced amendments to the Preferred Stock Purchase Agreements it has with the government-sponsored enterprises Fannie Mae and Freddie Mac. Those amendments removed the $200 billion per enterprise cap ($400 billion total) and, in effect, wrote a blank check for the amount of ‘credit’ that will be made available to the two mortgage giants,” the letter reads.
Freddie and Fannie Mae provided direct support of ‘no-personal-sacrifice-or-responsibility’ home loans being pressed on high-risk borrowers by the Barnie Franks and Chris Dodd and company that helped to directly lead to our current financial crisis.
In a healthy ecomomic situation, borrowers are expected to take ‘personal responsibility’ for their bad home mortgage decisions.
But it seems that ‘big-brother’ government has stepped in for mainly partisan political reasons to have the people who actually pay taxes shoulder this responsibility instead of the irresponsible borrowers shouldering it.
And talk about bonuses – but of course, no one is talking about the bonuses to Freddie and Fannie execs, just keeping us all focused on Wall Street bonuses – stocking up class envy, but avoid letting us know about government pay-outs.
Now we know what the “full faith and credit” clause means.
The [i]Wall Street Journal[/i] has recently reported that beginning in 1993 Fannie and Freddie began classifying loans improperly, certifying to banks that they were of better quality than they actually were. They should be shut down, not rescued.